Are Tesla Shares Headed for a Debacle?

NEW YORK ( TheStreet) -- Shares of Tesla have been appreciating for a while now, with the stock up nearly 165% over the course of a year.

But the luxury electric car manufacturer has started plummeting to $182.26 per share, representing a decline of nearly 15.98% over the course of a month.

This has shareholders scratching their chins and debating if Tesla is really a good place to put money. The recent debacle in the share price had a multitude of causes, including Tesla's earnings report, and questions on whether the stock is a technology bubble.

The company's fundamentals are by many standards horrible. Though Tesla on average loses money per share, its revenue has finally started to pick up. In addition, the company has continually been proved volatile, as it not only does a heavy amount of volume consistently, but also has ranged from $78.11 to $265.00 within 52 weeks. Furthermore, Tesla has an average price target from analysts of $224.83 per share within a year.

Most technology companies are hyped in the beginning until they become fundamentally strong. Tesla seems to be in the phase where growth finally starts to kick in and profit is still not consistent. Many of these tech companies still aren't at the stage of providing a dividend and therefore don't have extra cash flow. These things take time. In addition to all of those factors, Tesla is one of the most shorted stocks; more than 20% of its outstanding shares are sold short.

There are some tremendous risks for luxury car manufacturers. For example, states such as New Jersey are constantly changing their rules and regulations related to electric vehicles. Additionally, the space Tesla is in is geared toward high-net worth individuals. In this luxury market, Tesla may not achieve the revenue for which we all hope.

Let's go back from the past and future and into the present: Tesla's recent earnings performance was not what analysts were looking for. Profit topped expectations, at 12 cents per share, but when you knock out the use of generally accepted accounting principles, Tesla actually reported monstrously negative earnings and operated deep into the red for the quarter. In terms of sales, the company was already frowned upon for predicting a lower revenue quarter on quarter. Investors in high-flying stocks such as Tesla need to know that such technology companies may never achieve the growth potential that the Street or shareholders anticipate, and expectations might even be out of line.